Are You a Content Creator, Blogger, or Influencer in India? Keep Advance Tax in Mind!

Are You a Content Creator, Blogger, or Influencer in India? Keep Advance Tax in Mind!

The content creation industry is thriving! Whether you’re uploading videos on YouTube, writing captivating blog posts, or connecting with followers on Instagram, your enthusiasm can also turn into a considerable income source. With revenue from ads, brand partnerships, affiliate marketing, and selling merchandise, creators have numerous ways to generate earnings.

Nevertheless, such income comes with a tax obligation. While filing your annual Income Tax Return (ITR) may be familiar to you, are you aware of Advance Tax? If you’re making money through your content creation efforts in India, this is a crucial concept to grasp.

What is Advance Tax All About?

You can think of Advance Tax as a 'pay-as-you-earn' approach for income that typically does not have Tax Deducted at Source (TDS), or where TDS amounts are inadequate. Rather than paying your entire income tax bill as a lump sum after the financial year concludes, the Income Tax Act mandates that you project your income for the ongoing year and pay tax on it in installments during that year.

According to Section 208 of the Income Tax Act, 1961, if your anticipated total tax liability for the financial year is ₹10,000 or greater, you must make Advance Tax payments.

Why is Advance Tax Relevant for Content Creators?

• Type of Income: Earnings from YouTube (AdSense), blogging (ads, affiliates), Instagram (brand collaborations), sponsorships, merchandise, and more are commonly categorized as "Profits and Gains from Business or Profession" (PGBP) or occasionally "Income from Other Sources".
• Insufficient TDS: Unlike salary income, where employers routinely deduct TDS, your creator income rarely has TDS withheld, or the TDS that brands deduct (under Section 194R for benefits/perks or 194J/194H for professional fees/commission) might not fully cover your total tax obligation.
• Surpassing the Threshold: As your side project expands, the overall tax calculated on your combined earnings (including salary, if applicable) can easily exceed the ₹10,000 threshold, resulting in the necessity to pay Advance Tax.

(Note: Resident senior citizens aged 60 or older, who do not have income from PGBP, are not required to pay Advance Tax).

Steps to Calculate Your Advance Tax

Estimating advance tax requires assessing your income and tax liability for the entire financial year (April 1st to March 31st).

Estimate Your Total Income:

Project your earnings from all sources for the financial year:

• Creator Income: YouTube AdSense, brand partnerships, sponsorships, affiliate commissions, merchandise sales, workshop fees, etc. (Recognize that this may vary, but provide a reasonable estimate).
• Salary Income (if it applies).
• Interest income, rental income, capital gains, and so on.

Deduct relevant business expenses associated with your content creation (like depreciation on camera gear, software subscriptions, internet costs, travel for shoots, home office expenses, etc.) if you are calculating PGBP income. Keep supporting documents!

Calculate Estimated Tax Liability:

Determine your total taxable income after deductions. Be sure to take deductions under Chapter VI-A (such as Sec 80C, 80D, etc.) into account if you choose the Old Tax Regime. Under the New Tax Regime (which will be the default from FY 2025-26), most deductions won’t be available, but the tax slabs differ, and there’s a notable rebate for incomes up to ₹12 Lakh. Choose your regime thoughtfully based on your income and possible deductions.

Apply the relevant income tax slab rates for the current Financial Year (FY 2025-26 / Assessment Year 2026-27) to your estimated taxable income.

Include the Health & Education Cess (currently set at 4%).

Subtract TDS/TCS:

Deduct any TDS that has already been or is likely to be deducted by clients, brands, platforms (check Form 26AS/AIS), or your employer (if you’re salaried).

Deduct any TCS (Tax Collected at Source) that has been paid.

Verify the Liability Threshold:

If your Net Tax Liability amounts to ₹10,000 or more, you are required to pay Advance Tax.

A More Straightforward Option? Presumptive Taxation (Sections 44AD/44ADA)

For certain creators, the Presumptive Taxation scheme could simplify the calculations:

• Section 44ADA: This applies to specified professionals (such as those in legal, medical, engineering, accountancy, technical consultancy, and interior decoration) with gross receipts not exceeding ₹75 Lakh. Income is estimated to be 50% of the gross receipts. The classification of content creation as a 'specified profession' is a topic of debate, with some suggesting it could be categorized under technical consultancy or other recognized professions. It is advisable to consult a CA for guidance specific to your services.
• Section 44AD: This is for qualifying small businesses with a turnover up to ₹3 Crore (assuming 95% of receipts are digital). Here, income is presumed to be 6% (for digital receipts) or 8% (for cash receipts) of the total turnover. Certain creators might position their operations as a business that falls within 'other services'.

Advantage: You do not have to maintain extensive expense records, making tax calculations easier.

Main Point: If you decide to follow presumptive taxation under 44AD/44ADA, the advance tax must be paid in one installment by March 15th of the financial year.

Advance Tax Due Dates & Installments (FY 2025-26)

For taxpayers who are NOT utilizing Presumptive Taxation:

For taxpayers who opt for Presumptive Taxation (Sec 44AD/44ADA):

(Note: Remaining taxes can be paid after the March 15th installment up until March 31st without incurring interest under Sec 234C for the final installment, but interest under 234B may still apply if the total amount paid by March 31st falls short of 90% of the assessed tax).

How to Make Advance Tax Payments?

The payment process is simple and can be completed online:

1. Visit the Income Tax Department's e-filing portal: https://www.incometax.gov.in
2. Go to the 'e-Pay Tax' section.
3. You may need to log in or proceed with your PAN.
4. Select the payment option for 'Income Tax'.
5. Ensure you choose the correct Assessment Year (AY). For income earned from April 1, 2025, to March 31, 2026 (FY 2025-26), the AY is 2026-27.
6. Select 'Advance Tax (100)' as the Type of Payment.
7. Fill out the required details and select your payment method (Net Banking, Debit Card, UPI, etc.).
8. Complete the payment using the functions of Challan 280.
9. Download and retain the challan receipt, which will include the BSR code and challan serial number. This serves as your proof of payment.

What if You Miss Deadlines or Underpay?

Failing to adhere to deadlines or underpayment of advance tax results in interest penalties:

• Interest under Section 234B: Imposed at 1% simple interest per month if you haven't paid any advance tax, or if the total amount paid by March 31st is below 90% of your final assessed tax liability.
• Interest under Section 234C: Imposed at 1% simple interest per month for any delays or shortfalls in meeting the quarterly installment obligations as per the due dates and specified percentages.

Advice for YouTubers, Bloggers, and Influencers:

• Keep Thorough Records: Ensure you document all incoming funds (invoices, bank records, platform dashboards) and relevant costs (bills, receipts).
• Project & Reassess: Make realistic projections of your income. Given that creator earnings can fluctuate, examine your estimates before each payment deadline and modify as necessary.
• Familiarize Yourself with TDS: Understand the Tax Deducted at Source as applied by brands/platforms (check Form 26AS/AIS on the tax portal). Incorporate this into your calculations. Be aware of Section 194R regarding TDS on gifts or benefits exceeding ₹20,000.
• Select Your Regime Carefully: Choose between the Old and New tax regimes early in the financial year to accurately estimate your tax.
• Consider the Presumptive Scheme (If Suitable): Consult a Chartered Accountant to determine if you qualify for Section 44AD or 44ADA to simplify your tax process.
• Be Mindful of Deadlines: Set up reminders for advance tax due dates.

Conclusion

As a content creator in India, your artistic journey involves financial obligations. Advance Tax plays an essential role in this. By comprehending its relevance, accurately calculating your liability, and timely paying your installments, you can evade substantial interest penalties, ensuring smooth tax compliance, allowing you to concentrate more on your passion – producing captivating content!

If estimating your income or understanding tax regulations feels daunting, consider reaching out to a chartered accountant or tax expert for customized advice.

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